What happens when an employer lies during the hiring process?

There are many stories about employees being untruthful during the hiring process – exaggerating their qualifications, falsifying documents, and downplaying their weaknesses. In these situations, the employer can terminate for just cause upon discovering the lie, based on the degree and severity of the misrepresentation.

But what happens when an employer lies to an employee during the hiring process?

One example is when an employee leaves their job based on the promise of another opportunity, which ultimately falls through. If the employer represented that the job would be available, and the employee relied on that representation to his or her detriment, the employee may have a legal claim against the employer based on “negligent misrepresentation” or “fraudulent misrepresentation.”

Different types of misrepresentation

Negligent misrepresentation means that one party made a statement to another party (a “representation”) that ultimately turned out to be incorrect. In negligent misrepresentation cases, the representor made the representation carelessly and, importantly, without intent to deceive.

Our courts have developed the following legal test to determine if a negligent misrepresentation has occurred:

• Is there a duty of care based on a “special relationship” between the representor and representee?
• Is the representation in question inaccurate, untrue, or misleading?
• Did the representor act negligently in making that representation?
• Did the representee rely, in a reasonable manner, on that representation?
• Did the representee incur damages as a result of that reliance?

Alternatively, fraudulent misrepresentation involves intentionally lying or reckless disregard for the truth and with an intent to deceive someone. The courts have also created a legal test for fraudulent misrepresentation:

• A false representation made by the defendant.
• The defendant has some level of knowledge of the falsehood of the representation, whether through knowledge or recklessness.
• The false representation caused the plaintiff to act.
• The plaintiff’s actions resulted in a loss.

As you can tell from the differences in the legal tests, fraudulent misrepresentation is grounded in deceit, while negligent misrepresentation is based in the law of negligence.

You can find examples of fraudulent misrepresentation cases involving foreign workers, who are enticed to travel to Canada for a specific job, only to find that the employer intentionally deceived them by misrepresenting the work.

BC’s legislative approach to misrepresentation

In British Columbia, the Employment Standards Act has codified the above common-law legal tests into the legislation. Section 8 of the Act states:

“8. An employer must not induce, influence or persuade a person to become an employee, or to work or to be available for work, by misrepresenting any of the following:
(a) the availability of a position;
(b) the type of work;
(c) the wages;
(d) the conditions of employment.”

The “conditions of employment” referred to in s. 8(d) are defined in s. 1 of the Act as: “all matters and circumstances that in any way affect the employment relationship of employers and employees.” This definition provides for a wide range of situations not captured by a, b or c.

Post-hiring misrepresentation

This is a powerful option for employees, for three reasons.

First, s. 8 does not distinguish between negligence and fraud. Therefore, it is not necessary to show that the misrepresentation was intentional. It must be shown that the untruthful statement(s) had a bearing on the employment contract and influenced the party to accept the employment. The employee must show that they suffered a loss because of the misrepresentation.

Second, while s. 8 is considered to apply only in a pre-hiring context, it can also cover post-hiring representations (see for example: Francesco Aquilini, Paolo Aquilini, Roberto Aquilini et al., 2020 BCEST 90). In this decision, the Employment Standards Tribunal made the following remarks about the application of s. 8:

“However, section 8 also covers representations made to an individual so that they will ‘work’ or ‘be available for work,’ which could cover post-hiring representations. For example, an employer might entice an employee to work a weekend shift (on the employee’s usual day off) by offering premium pay (say, double time); such an inducement could readily fall within section 8 if the employer reneged on the promise. I also note that section 8 extends to representations about “conditions of employment” which is a very broadly defined term: “conditions of employment means all matters and circumstances that in any way affect the employment relationship of employers and employees.”  The use of the phrase “the employment relationship of employers and employees” appears to pre-suppose an existing, not merely a prospective, employment relationship.  In my view, if an employee were persuaded not to resign (and, in turn, to refuse another job offer) because, say, the employer promised the employee a raise and/or a promotion, that sort of promise could form the basis of a section 8 claim if the employer refused to honour it.”

Therefore, s. 8 provides protections for workers even after the hiring process ends.

‘Make whole’ compensation

Third, the remedy for contravening this section is a “make whole” remedy. This means the employer will be required to compensate the employee in such a way as to put him or her back in the same position as if the contravention had not occurred. Under s. 79(2) of the Act, the employer may be required to:

• Hire the person and pay any lost wages.
• Reinstate a person and pay any lost wages.
• Pay a person compensation instead of reinstatement.
• Pay for reasonable and actual out-of-pocket expenses.

Further, if it is found that the employer violated s. 8, the employer will be subject to an escalating monetary penalty, subject to s. 98 of the Act.

If an employee finds themselves in a situation where there is a possible violation of s. 8, they should immediately notify the employer. The employee is not required to refuse the work in order to file a complaint based on this section.

This is a powerful section of the Act that can have serious consequences for employers. Employers are encouraged to be mindful of making representations both during and after the hiring process.

Trevor Thomas is a co-founder and partner at Ascent Employment Law in Vancouver.